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PAE Ltd.

BSE: 517230 Sector: Auto
NSE: PAEL ISIN Code: INE766A01018
BSE 00:00 | 07 Dec 7.00 -0.20
(-2.78%)
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NSE 05:30 | 01 Jan PAE Ltd
OPEN 7.31
PREVIOUS CLOSE 7.20
VOLUME 3108
52-Week high 13.49
52-Week low 5.00
P/E
Mkt Cap.(Rs cr) 7
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 7.31
CLOSE 7.20
VOLUME 3108
52-Week high 13.49
52-Week low 5.00
P/E
Mkt Cap.(Rs cr) 7
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

PAE Ltd. (PAEL) - Auditors Report

Company auditors report

To the Members of

PAE Limited Report on the Standalone Financial Statements Qualified Opinion

We have audited the standalone financial statements of PAE Limited ("theCompany") which comprise the balance sheet as at 31st March 2022 andthe statement of Profit and Loss (Including Other Comprehensive Income) Statement ofchanges in Equity and Statement of Cash flows for the year ended on that date and notesto the financial statements including a summary of significant accounting policies andother explanatory information (hereinafter referred to as "the standalone financialstatements").

In our opinion and to the best of our information and according to the explanationsgiven to us except as stated in the Basis of Qualified opinion paragraph belowthe aforesaid standalone financial statements give the information required by theCompanies Act. 2013 (the "Act") in the manner so required and give a true andfair view in conformity with the Indian Accounting Standards prescribed under Section 133of the Act read with the Companies (Indian Accounting Standard) Rules 2015 as amended("Ind As") and the accounting principles generally accepted in India of thestate of affairs of the Company as at 31st March 2022 its profit totalcomprehensive income changes in equity and its cash flows for the year ended on thatdate.

Basis for Qualified Opinion

4) We draw your attention to the fact that the Net Worth of the company has beencompletely eroded as at the year ended 31st March 2022. Further the companyhas incurred a loss of Rs. 85 Lakhs (before exceptional items & other comprehensiveincome) for the year ended 31st March 2022.

Further the liabilities of the Company far exceed the realizable value of assets ownedby the company. In addition the company has significant litigations under various taxation& other laws the outcome & impact of which is unascertainable.

These conditions state that a material uncertainty exists that may cast significantdoubt on the entity's ability to continue as a going concern. Despite these circumstancesfor the reasons mentioned in Note No. 34 to the standalone financial statements theaccounts have been prepared on a going concern basis.

5) We draw your attention to the fact that the company has total unclaimed maturedfixed deposits of Rs.3.95 lacs as at the year ended 31st March 2022. Howeveragainst the total amount of unclaimed matured deposits a sum of Rs.2.30 lacs has beenmaintained in liquid funds. Therefore the company has not funded the said amount incompliance with the provisions for Section 74 of the Companies Act 2013.

Further the amount due for transfer to Investor Education and Protection Fund inrespect of unclaimed matured deposit amounting to Rs.2.05 Lac & interest on unclaimedmatured deposits amounting to Rs.0.06 Lac as at 31st March 2022 as requiredunder section 125 of the Companies Act 2013.

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theStandalone Financial Statements section of our report. We are independent of the Companyin accordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thestandalone financial statements under the provisions of the Companies Act 2013 and theRules thereunder and we have fulfilled our other ethical responsibilities in accordancewith these requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our qualified opinion on thestandalone financial statements.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters.

The matters described under the Basis for Qualified Opinion section were determined tobe key audit matters to be communicated in our audit report.

Emphasis of Matter

The Company's policy for Internal Financial Controls over Financial Reporting requiresto be strengthened for adequate effectiveness to determine the risk assessments & todetect fraud if any. We are unable to comment on Internal Financial Control over FinancialReporting as the company neither has internal audit control system nor an externallyappointed internal auditor.

Our opinion is not modified in respect of this matter.

Information other than the financial statements & Auditor's report thereon

The Company's management and Board of Directors are responsible for preparation of theother information. The other information comprises the information included in theCompany's annual report but does not include the standalone financial statements and ourauditors' report thereon.

Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance or conclusion thereon.

In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation; we are required to report that fact. We have nothing to report in thisregard.

Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance changes in equity and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theaccounting Standards specified under section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror. In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so. In preparing the standalone financial statements management isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.

The Board of Directors is also responsible for overseeing the Company's financialreporting process.

Auditor's Responsibilities for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

• Obtain an understanding of internal financial control relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Companies Act 2013 we are also responsible for expressing our opinionon whether the company has adequate internal financial controls system in place and theoperating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.

Refer Note No. (1) of our basis for qualified opinion.

• Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.

Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonable knowledgeable user of the standalone financial statements may be influenced. Weconsider quantitative materiality & qualitative factors in (i) planning the scope ofour audit and in evaluating the results of our work; and (ii) to evaluate the effect ofany identified misstatements in the standalone financial statements.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2020 ("the Order")issued by the

Central Government of India in terms of Section 143(11) of the Act we give in"Annexure A" a statement on the matters specified in paragraphs 3 and 4 of theOrder to the extent applicable

2. As required by Section 143(3) of the Act we report that:

a. We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit;

b. In our opinion proper books of account as required by law have been kept by theCompany in so far as it appears from our examination of those books;

c. The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome the Cash Flow Statement and Statement of Changes in Equity dealt with by thisReport are in agreement with the relevant books of account.

d. In our opinion the aforesaid standalone Ind AS financial statements comply with theIndian Accounting Standards prescribed under section 133 of the Act read with relevantrules issued thereunder.

e. On the basis of the written representations received from the directors as on 31stMarch 2022 and taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2022 from being appointed as a director in termsof Section 164(2) of the Act;

f. With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B"

g. With respect to the matter to be included in the Auditor's Report under section197(16) of the Act:

In our opinion and to the best of our information and according to the explanationsgiven to us and examination of the records of the Company the Company has not providedfor any remuneration payable to its directors during the current year. Therefore commentsrequired u/s 197(16) have not been given.

h. With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended inour opinion and to the best of our information and according to the explanations given tous:

(i) The Company has disclosed the impact of pending litigations on its financialposition in its standalone Ind AS financial statements. Refer note 33 to the standaloneInd AS financial statements.

(ii) The Company does not have any long-term contracts including derivative contractsas at 31st March 2022 for which there were any material foreseeable losses.

(iii) There has been delay in transferring amounts in respect of interest and maturedunclaimed principal amount required to be transferred to the Investor Education andProtection Fund by the Company. Refer foot note to note no. 17 of financial statement.

(iv) (a) The Management has represented that to the best of it's knowledge and beliefas disclosed in the note 49 to the standalone financial statements no funds have beenadvanced or loaned or invested (either from borrowed funds or securities premium or anyother sources or kind of funds) by the Company to or in any other person(s) orentity(ies) including foreign entities ("Intermediaries") with theunderstanding whether recorded in writing or otherwise that the Intermediary shalldirectly or indirectly lend or invest in other persons or entities identified in anymanner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") orprovide any guarantee security or the like on behalf of the Ultimate Beneficiaries.

(b) The Management has represented that to the best of it's knowledge and belief asdisclosed in the note 49 to the standalone financial statements no funds have beenreceived by the Company from any person(s) or entity(ies) including foreign entities("Funding Parties") with the understanding whether recorded in writing orotherwise that the Company shall directly or indirectly lend or invest in other personsor entities identified in any manner whatsoever by or on behalf of the Funding Party("Ultimate Beneficiaries") or provide any guarantee security or the like onbehalf of the Ultimate Beneficiaries.

(c) Based on the audit procedures that have been considered reasonable and appropriatein the circumstances nothing has come to our notice that has caused us to believe thatthe representations under sub clause (i) and (ii) of Rule 11(e) as provided under (a)& (b) above contain any material misstatement.

(v) The company has neither declared nor paid any dividend during the year. Hencecomments as required under Clause 11(f) of the Companies (Audit & Auditors) Rules2014 have not been given.

Annexure A to the Auditors' Report

The Annexure referred to in the Independent Auditors' Report to the members of theCompany on the Standalone IND-AS financial statements for the year ended 31stMarch 2022

In our opinion and to the best our information and according to the explanationsprovided to us by the Company and based on our examination of the books of account in thenormal course of audit we state that:

(i) In respect of the Company's Property Plant & Equipment and Intangible Assets:

(a) (A) The Company is maintaining proper records showing full particulars includingquantitative details and situation of Property Plant & Equipment.

(B) The Company does not own any intangible assets as at the year ended 31stMarch 2022. Accordingly comment under this clause has not been given.

(b) A substantial portion of the Property Plant & Equipment has been physicallyverified by the management at reasonable intervals and no material discrepancies werenoticed on such verification.

(c) Based on our examination of the registered sale deed / transfer deed provided tous we report that the title in respect of the immovable properties (other thanproperties where the company is the lessee and the lease agreements are duly executed infavor of the lessee) disclosed in the financial statements included under Property Plant& Equipment are held in the name of the Company as at the balance sheet date.

(d) The Company has not revalued any of its the Property Plant & Equipment andintangible assets during the year.

(e) No proceedings have been initiated during the year or are pending against theCompany as at 31st March 2022 for holding any benami property under theProhibition of Benami Property Transactions Act 1988 (as amended in 2016) and the rulesmade thereunder.

(ii) (a) The Company did not hold any inventory as at the year end. Therefore commentunder this clause has not been given.

(b) As explained to us the Company has not been sanctioned working capital limits inexcess of ' 5 crore in aggregate from banks on the basis of security of current assetsduring the year. Therefore comment under this clause has not been given.

(iii) The Company has not provided any guarantee or security or granted any loans oradvances in the nature of loans secured or unsecured to companies firms limitedliability partnership or any other parties during the year. The Company has not made anyinvestments in firms limited liability partnership or any other parties. Accordinglyclause 3(iii)(a) to clause 3(iii)(f) of the Order are not applicable to the Company.

(iv) The Company has not given any loans made any investments or provided anyguarantee or security as specified under section 185 and 186 of the Companies Act 2013.Accordingly comment of compliance with the provisions of section 185 and 186 of theCompanies Act 2013 as required by clause 3(iv) has not been given.

(v) The Company has not accepted any deposits or amounts deemed to be deposits duringthe year.

However the Company had accepted deposits prior to the commencement of Companies Act2013. In terms of section 74(1)(b) of the Companies Act 2013 an amount of Rs.3.95 lacsis matured but unclaimed as at the year end. The company has shortage of liquid assetsrequired to be maintained amounting to Rs.1.65 lacs in respect of principal amount of theunclaimed mature deposits and Rs.0.08 lac in respect of unpaid interest on the matureddeposits which is subject to reconciliation.

Company has not transferred unclaimed matured deposit amounting to Rs.2.05 Lac &interest on unclaimed deposits amounting to Rs. 0.06 Lac to investor education andprotection fund which were due for transfer as on 31.03.2022.

Further there are certain dealer deposits outstanding at the year-end amounting to Rs.28.27 Lacs inclusive of interest.

(vi) According to the information & explanation provided to us the CentralGovernment has not prescribed the maintenance of cost records under sub-section (1) ofsection 148 of the Companies Act 2013.

(vi) In respect of statutory dues:

(a) The Company is not regular in depositing undisputed statutory dues including Goods& Service Tax Provident Fund Employees' State Insurance Income Tax Sales-taxService tax duty of Customs duty of Excise Value Added Tax Cess and any otherstatutory dues applicable to it to the appropriate authorities. The extent of arrears ofstatutory dues which have remained outstanding as at the last day of the financial yearunder audit for a period of more than six months is given in the table below.

Nature of Dues Amount Rs. (excluding interest)
Labour welfare funds 443
Entry Tax 61425
Central Sales Tax 27701
Value Added Tax 995346
Superannuation Payable 344250
Family Pension Fund 87885
Tax Deducted at Source 530343
Provident Fund 2420347
Staff/Employer ESIC 522870
Profession Tax 209555
Staff Insurance 12771
Total 5212936

(b) Details of disputed statutory dues referred to in Clause (a) above which have notbeen deposited or partially deposited as on 31st March 2022 are as follows:

Name of the Statute Nature of Dues Period to which amount relates Amount (Rs. in lacs) Forum where dispute is pending
Central Sales Tax and VAT Act VAT CST penalty and interest 1992-93 3.05 Appellate Tribunal
Central Sales Tax and VAT Act VAT CST penalty and interest 1996-97 2001-02 till 2015-16 601.60 West Bengal Sales Tax
VAT Act VAT penalty and interest 2005-06 107.99 Asst. Commissioner
Various State VAT Act VAT penalty and interest 2006-07 3.80 Revisional Tax board / Asst. Commissioner
Various State VAT Act VAT penalty and interest 2007-08 39.27 Asst. Commissioner /Rev. Tax Board/ commercial tax office/ Appellate Assistant Commissioner
Various State VAT Act VAT penalty and interest 2008-09 17.27 Asst. Commissioner / Rev. Tax Board / Appellate Asst. Commissioner
Central Sales Tax & Various State VAT Act VAT CST penalty and interest 2009-10 38.97 Asst. Commissioner / Rev. Tax Board / Appellate Assistant Commissioner
Central Sales Tax & Various State VAT Act VAT CST penalty and interest 2010-11 202.74 Appellate Asst Commissioner/Commercial Taxes Dept/ Deputy Commissioner of Sales Tax
Central Sales Tax & Various State VAT Act VAT CST penalty and interest 2011-12 55.37 Asst. Commissioner/Appellate Tribunal/Deputy Commissioner
Central Sales Tax & Various State VAT Act VAT CST penalty and interest 2012-13 407.67 Commissioner of sales Tax/ Asst. Commissioner/ Commercial Taxes/Appellate Asst Commissioner /Deputy Commissioner.
Central Sales Tax & Various State VAT Act VAT CST penalty and interest 2013-14 36.65 Commissioner of Sales tax/Asst. Commissioner/ Deputy Commissioner/Joint Commissioner
Central Sales Tax & Various State VAT Act VAT CST penalty and interest 2014-15 381.86 Asst. Commissioner/ DC Sales Tax Officer/ Appellate Asst Commissioner / Commercial Tax Office
Various State VAT Act VAT Penalty and Interest 2015-16 50.60 Commissioner of Sales Tax/DC Commercial Tax/ The Asst /Joint Commissioner
Central Sales Tax & Various State VAT Act VAT CST penalty and interest 2016-17 0.611 DC Commercial Tax/DC Sales Tax Officer
Total 1947.47

Above mentioned amounts are net of amounts paid against the demands which are subjectto reconciliation with various branches. Amounts are as certified by the management.

(viii) There were no transactions relating to previously unrecorded income that havebeen surrendered or disclosed as income during the year in the tax assessments under theIncome Tax Act 1961.

(ix) (a) As mentioned in note no. 15(a) to the standalone financial statements thecompany has fully repaid the outstanding loan of Union Bank of India (PreviouslyCorporation Bank) in accordance with the One Time Settlement ("OTS") arrived atwith the lender. Further the company does not have any borrowings from any government.Further loans amount to Rs. 1024.57 lakhs from directors & inter corporate depositsare repayable on demand and terms & conditions for payment of interest thereon havenot been stipulated. According to the information & explanation given to us suchloans and interest thereon have not been demanded for repayment during the year.

(b) The Company has not been declared a willful defaulter by any bank or financialinstitution or government or any government authority.

(c) The Company has not taken any term loans during the year and there are nooutstanding term loans at the beginning of the year. Hence reporting under clause 3(ix)(c)of the Order is not applicable.

(d) On an overall examination of the financial statements of the Company funds raisedon short-term basis have prima facie not been used during the year for long termpurposes by the Company.

(e) On an overall examination of the financial statements of the Company the Companydoes not hold investments in any subsidiary associate or joint ventures as at 31stMarch 2022 as defined under Companies Act 2013. Hence reporting under clause 3(ix)(e)of the Order is not applicable.

(f) On an overall examination of the financial statements of the Company the Companydoes not hold investments in any subsidiary associate or joint ventures as at 31st March2022 as defined under Companies Act 2013. Hence reporting under clause 3(ix)(f) of theOrder is not applicable

(x) (a) The Company has not raised any moneys by way of initial public offer or furtherpublic offer including debt instruments during the year. Hence reporting under clause3(x)(a) of the Order is not applicable.

(b) During the year the Company has not made any preferential allotment or privateplacement of shares or convertible debentures (fully or partly or optionally). Hencereporting under clause 3(x)(b) of the Order is not applicable.

(xi) (a) To the best of our knowledge and belief and according to the information andexplanations given to us no material fraud by the Company or on the Company has beennoticed or reported during the year.

(b) To the best of our knowledge and belief and according to the information andexplanations given to us no report under sub-section (12) of section 143 of the CompaniesAct 2013 has been filed in Form ADT-4 as prescribed under rule 13 of Companies (Audit& Auditors) Rules 2014 with the central government during the year and upto the dateof this report.

(c) As represented to us by the management there are no whistle blower complaintsreceived by the Company during the year.

(xii) The Company is not a Nidhi Company and hence reporting under clause (xii) of theOrder is not applicable.

(xiii) In our opinion the Company is in compliance with the provisions of section 177and 188 of the Companies Act 2013 with respect to applicable transactions with relatedparties and the details of related party transactions have been disclosed in note no. 29in the standalone financial statements as required by the applicable accounting standards.

(xiv) (a) In our opinion and based on our examination the company does not have aninternal audit system commensurate with the size and nature of its business. is requiredto have internal audit system under section 138 of the Act it does not have the sameestablished for the year.

(b) The Company is required to appoint an internal auditor in accordance with theprovisions of section 138 of the Act. However during the year under audit the company hasnot appointed any internal auditor and accordingly no reports of internal auditor weremade available to us for our consideration.

(xv) According to the information & explanations given to us and based on ourexamination of the records of the Company the Company has not entered into any non-cashtransactions with directors or persons connected to its directors and hence the provisionsof section 192 of the Companies Act 2013 are not applicable to the Company.

(xvi) (a) & (b) In our opinion the Company is not required to be registered undersection 45-1(A) of the Reserve Bank of India Act 1934. Hence reporting under clause3(xvi)(a) & (b) of the Order is not applicable.

(c) & (d) The Company is not a Core Investment Company (CIC) as defined in theregulations made by the Reserve Bank of India. Accordingly clause 3(xvi)(c) & (d) ofthe Order is not applicable.

(xvii) The Company has incurred cash losses during the financial year covered by ouraudit of Rs 84.15 lakhs as well during the immediately preceding financial year of Rs.683.65 Lakhs. The above figures have been computed without considering income earned onaccount of exceptional items.

(xviii) There has been no resignation of the statutory auditors of the Company duringthe year. Accordingly clause 3(xviii) of the Order is not applicable.

(xix) According to the information and explanations given to us and on the basis of thefinancial ratios ageing and expected dates of realization of financial assets and paymentof financial liabilities other information accompanying the financial statements ourknowledge of the Board of Directors and management plans and based on our examination ofthe evidence supporting the assumptions as mentioned in the ‘Basis for qualifiedopinion' paragraph of this report in our opinion material uncertainty exists as on thedate of the audit report that the company is not capable of meeting its liabilitiesexisting at the date of balance sheet as and when they fall due within a period of oneyear from the balance sheet date.

(xx) In our opinion and according to the information and explanations given to us theprovisions of section 135 of the Companies Act 2013 are not applicable to the Company.Accordingly clauses 3(xx)(a) and 3(xx)(b) of the Order are not applicable.

Annexure - B to the Independent Auditor's Report

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act") referred to in paragraph 2 (f) onReport on Other Legal and Regulatory Requirements of our report.

Disclaimer of Opinion

We have not audited the internal financial controls over financial reporting withreference to the standalone financial statements of PAE Limited ("theCompany") as of 31st March 2022 in conjunction with our audit of thestandalone financial statements of the Company for the year ended on that date.

According to the information and explanation given to us the Company has notestablished its internal financial controls over financial reporting on criteria based onor considering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls over Financial Reporting issued by the Institute ofChartered Accountants of India. Because of this reason we are unable to obtain sufficientappropriate audit evidence to provide a basis for my / our opinion whether the Company hadadequate internal financial controls over financial reporting and whether such internalfinancial controls were operating effectively as at 31st March 2022.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India („ICAI'). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate internal financial controls overfinancial reporting was established and maintained and if such controls operatedeffectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

For Jayesh Dadia & Associates LLP
Chartered Accountants
Firm's Registration No. 121142W / W100122
Rahil Dadia
Partner
Membership No. 143181
Place of Signature: Mumbai
Date: 27th May 2022
UDIN: 22143181AKKTLI8708

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